PSC told to dismiss phone rate hikes

Public Service Commission lawyers agree with consumer groups and the Office of Public Counsel that the petitions are seriously flawed.

SCOTT BARANCIK
Published September 20, 2003

A plan that would raise basic residential phone rates in the Tampa Bay area as much as 46 percent by 2005 has been dealt an unexpected setback.

Late last month, Verizon, Sprint and BellSouth submitted plans to increase local phone rates in two stages, on Jan. 1, 2004, and Jan. 1, 2005. They said the timing complied with a new law permitting such increases if they were put in place over a minimum of two years and coupled with reductions in access fees collected from long-distance companies for instate calls.

But in a memo this week, staff lawyers at the Florida Public Service Commission called that timing a "tortured reading" of the law because the full rate increase would take effect a year and a day after the hikes began. Consumer groups and the Office of Public Counsel, a state agency that represents ratepayers before the PSC, had advanced the same argument.

The PSC staff recommended that the five-member commission dismiss the rate increase petitions at a meeting scheduled for Sept. 30. The companies would be permitted to submit new applications with revised timelines.

Verizon spokesman Bob Elek said if the commissioners take that course, his company probably will push back its schedule of proposed rate increases to March 1, 2004, and March 1, 2006.

When the new law allowing such increases was being debated earlier this year, Verizon and other companies said they planned to phase in the increases over three to four years.

"We have our disputes with (commission) staff," said Charlie Beck, interim chief of the Office of Public Counsel, "but on this one, they've agreed with us."

The public counsel's office was the first to object to the phone companies' interpretation of "two years" in a Sept. 3 motion to dismiss the plans.

Twomey and Beck were less pleased with two "alternative" options the commission staff included with its "primary" recommendation.

One option was that the commissioners postpone a decision on the rate-schedule issue until after public hearings are held. Another was to deny the public counsel's motion-to-dismiss on the grounds that the schedule was just one of several substantive considerations.

Beck called the alternatives puzzling, arguing they directly contradicted the staff's recommendation. Twomey speculated that the staff included the alternatives to provide political cover for the commissioners if they side with the phone companies. Critics have portrayed the PSC as overly friendly to the phone and power industries.

Commission spokesman Kevin Bloom said the staff was merely being thorough.

"It sounds like they're being equivocal, but they really aren't," he said. "I think if you're an attorney, you have an obligation to examine every possibility and make every option known to your client - in this case, the commissioners."

The Public Service Commission has planned to have at least 10 public hearings on the proposed rate increases in various Florida cities. A hearing is scheduled for Oct. 3 in Tampa.